Obamacare mandate may be ‘mandate plus’

Can’t get enough of Obamacare’s individual mandate? Get ready for “mandate plus.”

The Obama administration always said there was a practical reason it needed the mandate, which starts next year. It wasn’t to be mean to people — it was supposed to pull in enough healthy customers to help pay for all the sick people who will get coverage. That’s why the White House stuck with it all the way to the Supreme Court — however unpopular politically, it was the best tool to make the new health system work.

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Here’s the catch: The individual mandate penalties will be pretty weak as they are phased in over two years — only $95 when they start in 2014, much less than it costs to buy insurance. And yet, everyone with pre-existing conditions will have to be accepted for coverage right away.

That’s why insurance companies are telling the administration the mandate won’t be enough for the first two years. They want more incentives — such as a late enrollment fee — to get healthy people to sign up quickly. Without getting the healthy folks in, the fear is that everyone’s health insurance premiums could shoot through the roof when all those sick people get their coverage.

The idea is being called “mandate plus” — because some of the ideas were floated by health experts last year as replacements, in case the Supreme Court struck the mandate down. Now that the mandate is here to stay, insurance companies and some policy experts say the other ideas should go hand in hand with the coverage requirement to make the whole system work — and be affordable.

The states could impose some of these incentives, too, and they could become a future lobbying battleground. But right now, the insurers are focused on persuading the Department of Health and Human Services to add them on its own.

“The key really is, how do you get younger people to buy coverage?” said Justine Handelman, vice president for legislative and regulatory policy at the Blue Cross and Blue Shield Association. “If you can jump in and out every time you need services, costs will go up.”

The mandate is the “stick” that’s supposed to prevent that, by making people pay a penalty (or as the Supreme Court called it, a tax) if they don’t get health coverage when they’re eligible. When the mandate is at full strength in 2016, people will pay $695 or 2.5 percent of their income, whichever is greater.

But from a practical perspective, it’s really not that much of a stick in the first two years. Next year, if you don’t get health insurance, you’d pay $95 or 1 percent of your income — a little less than you might pay for an iPod Nano. In 2015, you’d pay $325 or 2 percent of your income.